What is a waterfall chart?
Have you ever looked in your bank account and wondered how on Earth your checking balance got that low?
Or opened your bag of Halloween candy to find out you’d eaten it all and couldn’t remember when?
You know what you started with, and you know the end result, but you don’t know when and how the changes occurred.
Believe it or not, that happens to businesses as well. With so many customers and expenses, it can be hard to track where money comes from, or where it goes.
That’s where the waterfall chart comes in.
A waterfall chart, also known as a waterfall graph or cascade chart, illustrates how a number got from one state to another. It’s useful not just for money, but also for customers, inventory, personal goals, and more.
This article will tell you everything you need to know about waterfall charts and how to make them.
What is a waterfall chart?A waterfall chart is a bar graph that demonstrates how one value changes into another over time.
Waterfall charts help you diagnose the root cause of a change. Instead of just telling you that you’ve made a profit, they show you where the profit comes from.
Waterfall charts have nothing to do with the waterfall method of project management. (Waterfall managers can use waterfall charts if they want, but they’re not related).
But what is a waterfall chart used for?
Take a look at the example below. It’s just about the simplest waterfall chart we can imagine:
This company could have just looked at the profit they made in 2008. But even if it was different from the year before, it wouldn’t tell them much they could use.
The waterfall chart breaks that profit down. The company’s leaders can now see they made twice as much money from products as services—so they might want to focus more energy on products in the future.
On the other side, their fixed costs are looking pretty high. This waterfall chart reveals a clear opportunity to make more profits by reducing overhead.
You can add multiple years to one waterfall chart, demonstrating how each part of the profit and loss changes over time. This can help determine if one of your areas is consistently losing money or running over budget.
Waterfall charts don’t have to be about money, either. You could use one to show customer growth year over year, and break down what segments are growing faster or slower.
A waterfall chart could also show how people are engaging with your ad campaign, what they’re using your product for, or what’s happening in your industry overall. The only limit is your imagination.
How do I create a waterfall chart?
Now that you’ve learned what you can do with a waterfall chart, you’re probably eager to create your own. The 2 most common tools to do that are Microsoft Office products: Excel and PowerPoint. But may we recommend a beautiful, resourceful option: monday.com! More on this below 🙂
How do I create a waterfall chart in Excel?
The latest version of Excel has waterfall charts as a built-in feature. If you write a data set, you can use it to create an Excel waterfall chart. The process is pretty much the same on MacOS or Windows.
First, write your data set in 2 columns. Say you want to break your monthly revenue down into gains and losses. Write it out like this, putting the labels in the 1st column and the numbers in the 2nd:
Highlight all the cells, then click the Insert tab. Near the middle, next to all the charts, you’ll see one that looks like this:
Click it, then click “Waterfall” on the menu that appears. Excel will draw up a waterfall chart using your data inputs. Each positive value will share one color, and each negative value will share another.
The first output might look something like this.
Huh…that’s not right.
The profit column should be a sum of all the other columns, not a floating column with its own independent value.
To change that, click on the column you want to edit. A sidebar will appear on the right, with a box labeled “Set as total.”
Check that box.
If you can’t see it, find the sidebar tab shaped like 3 chart columns.
Now you can give your chart a name and expand the data label row so they’re all visible.
If you want to add or remove connector lines between the bars, click one of them, then click it again to start editing the whole series.
Check or uncheck the box on the right-hand sidebar labeled “Show connector lines.”
You can also create a chart with multiple totals. Say you want to compare this month’s profit to last month’s.
Just add the new data in the rows below the old data, and repeat the process to set any column that represents a sum as a total. Click that column, then check “Set as Total” in the sidebar.
How do I create a waterfall chart in PowerPoint?
The easiest way is to create the chart in Excel, then copy and paste it into PowerPoint. However, once you do this, you can’t change the pasted chart—you would have to edit your Excel waterfall chart and copy it again.
PowerPoint borrows some functions from Excel to help you create a waterfall chart.
Start by adding a new slide to your presentation.
Click the Chart icon in the center of the page, then select Waterfall from the drop-down menu. Click the waterfall chart.
You can also add one by clicking the Insert tab, going to the Chart button in the middle of the top bar, and selecting Waterfall in the same way.
Either way you choose, PowerPoint adds a placeholder chart, and automatically opens a linked Excel spreadsheet. Add your data to the spreadsheet in the same way you would to make the chart in Excel: data label column to the left, value column to the right.
The Excel spreadsheet is linked to PowerPoint through Microsoft OneDrive, so you’ll need to set that up if you haven’t already.
Once you do that, Excel transmits your values back to PowerPoint, which uses them to create a waterfall chart.
Here’s the catch, though: you can’t create a waterfall chart where some bars represent totals, like you could in Excel. You can add the component bars, and discuss the total verbally—or draw it in yourself.
How do I create a waterfall chart with monday.com?
Did all that sound a little convoluted to you? You’re not alone.
Waterfall charts have a bad reputation for being complicated, hard to create, and hard to understand.
As useful as they can be, lots of people give up when they can’t make Microsoft Office do what they want.
We’d like to suggest an alternative: the Chart View from monday.com.
Oh my that’s just so much prettier, don’t you agree?
All you have to do is add the Chart Widget to your monday.com dashboard, and you can easily see any template as a customizable bar chart.
Excel and PowerPoint are great products, but there are some things they just aren’t built for. It can be a hassle to try to get them to perform in ways Microsoft never intended.
The best alternative is to pick project management software that’s designed to fit your needs and easy to customize around your business’s everyday tasks.
But if you still want to make a waterfall chart using monday.com’ here’s how to do it:
How to build your monday.com boards in Waterfall
Step 1: Set up your groups
In order to build your boards in Waterfall methodology, you should split the project into several groups of items defining the key milestones of the project. Let’s say we are building DeLorean DMC-12, the Back to the Future car. The whole project consists of four stages: Design the Car, Production, QA, and Assembly, and each of the stages has a list of tasks that need to be completed:
Step 2: Add your columns
For each task, you should assign a person using the Person Column, add a Status Column to mark the progress, and the Timeline Column to set time frames. Set the dates of implementation for each task in the Timeline, and you will see it displayed sequentially in the Timeline View:
At the top of the Timeline View, you can adjust the display to zoom in/out. To the right, you can arrange the view by Groups, Person, Status, or without any grouping. You can also adjust the color of the timeline bars from the settings bar on the right.
Step 3: Set your milestones
You can set up your milestones by right-clicking on an item in the Timeline View:
Or by clicking on the timeline bar from the table view and selecting “Set milestone” beneath the calendar:
Step 4: Set up your dependencies
Once your timeline column is set up properly, you may want to introduce a dependency automation. A dependency automation will help to ensure that your dates remain in proper order even if a task is delayed.
You can add dependencies by going to the Automations Center at the top of your board, choosing “Dependencies” from the Categories, and selecting the recipe that works for your workflow. For this example, we’ll use the “Adjust the date of an item to reflect the changes made in the date of its dependency item” automation recipe.
To learn more about setting up dependencies on monday.com, check out this article.
Let us know if you need any help with building your board using Waterfall methodology! We’re here for you 24/7 at firstname.lastname@example.org. 😁
Now that you know how to create a waterfall graph, here are some cool things you can do with one:
- Track the monthly credits and debits in your bank account.
- See what days people are most likely to watch your videos.
- Keep track of daily resource allocation on your team.
- Measure which of your products is the most profitable.
Looking for the perfect monday.com template to run through Chart View? Try starting out with our campaign tracking template, where you can monitor how much you’re spending on each of your marketing campaigns.